Consumers Expected To Spend $41 Billion On Cars This Month

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Automotive Editor

Anthony Alaniz is an award-winning journalist living in southeast Michigan. His professional writing career spans nearly a decade, ranging from writing for the local newspaper to Autoweek and Motor1. When he's not writing about cars, he covers the horror film genre at Modernhorrors.com.

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, Automotive Editor - May 31, 2019

That’s up $381 million from May 2018.

The automotive industry is preparing for a slowdown even if the numbers tell a different story. According to J.D. Power, which partnered with LMC Automotive, consumers are expected to spend $41 billion on cars this month. That’s a $381 million increase over May 2018. However, those numbers tell just one slice of a larger, more worrying picture.

While consumer spending is up, overall car sales are declining. May retail sales of new cars are expected to drop 3.1% over the same month last year, continuing the year’s downward trend. Sales through May are expected to be down 5.2%.

But that’s not all. While sales are dropping, automakers are continuing to pump out cars as if sales are chugging along at a healthy pace. This is causing vehicle inventories to rise at dealerships. According to J.D. Power, “On average, new vehicles sold in May spent 74 days on dealer lots.” That’s the highest level for May since 2009 and the Great Recession. Twenty-three percent of vehicles sold in May have sat on dealership lots for 90 days or more.

To respond to the rising inventories, automakers are throwing discounts at slow-selling models, and there’s data to prove it. In May, inventive spending per vehicle is up $25 to $3,722. Yes, it’s a modest increase; however, it counters the 10-month trend of lower discounts year-over-year.

With sales declining and dealers increasing incentives, the idea consumers will spend $381million more on cars this month may seem odd. However, there’s a reason. New-vehicle transaction prices continue to rise. People are paying more for a new car than ever before. For May, transaction prices are up 4% compared to last year, which should reach $33,457.

Automakers may be winning big now; however, sales are starting to slow as prices rise, which could see their financial success dwindle. That’s not to say we’ll see a 2008-2009 financial crisis, but there will be a contraction in the market. And automakers know it’s coming.

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, Automotive Editor

Anthony Alaniz is an award-winning journalist living in southeast Michigan. His professional writing career spans nearly a decade, ranging from writing for the local newspaper to Autoweek and Motor1. When he's not writing about cars, he covers the horror film genre at Modernhorrors.com.

Follow On: Twitter | Website

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